KEY MARKET INDICATORS as of June 27, 2017
May Home Sales
Existing Home Sales – Existing home sales increased 1.1% m/m to a seasonally adjusted annual rate of 5.62 million units in May. Compared to 12 months ago, existing home sales were up 5.7%. We believe that a growing first-time homebuyers market and high turnover in the labor market are two factors responsible for the momentum in the housing market. The growth in existing home sales is remarkable considering the low inventory level in the housing market. Unsold inventory represented 4.2 months of supply – far below the 6 months of supply that is regarded as normal. Homes were sold quickly after listing. Typical homes stayed on the market for just 27 days in May, vs. 32 days a year ago. For realtors and loan officers, this means that while homebuyers may need more time finding the right home, once they have found the right home, they will act fast to close the sale. The tight housing market condition continued to drive home prices higher, with the median home price up 5.8% from a year ago to $252,800. The 30-year conventional mortgage rates averaged around 4.01% in May, down 4 basis points from April. It has come down another 10 basis points in June.
New Home Sales – New-home sales increased 2.9% m/m to 610,000 units (SAAR) in May. Compared to 12 months ago, new home sales were up 9.4% in May. Regionally, sales in the West and South regions grew month over month, while sales in the Midwest and Northeast were down.
The moderate growth in home sales and home price appreciation are both positive factors for mortgage origination volume – driving growth in the number of borrowers and larger loan balances. We expect the growth in purchase volume to partially offset the decline in refinance volume in 2017. Mortgage lenders will increasingly turn their attention to the purchase market.
* FHFA Purchase-Only Home Price Index